Before starting your house hunting in earnest, the real estate professional with whom you are working likely will "prequalify" you to determine a price range you can afford.

 Prequalification is a necessary part of the home buying process, and it helps save you time and money.

Don't be shy or withhold information about your income or credit status. Your real estate professional isn't trying to pry. Rather, he or she must know all details related to your ability to obtain a mortgage.

By candidly discussing your financial situation, you'll give the agent the information necessary to show you homes you can afford. If you don't open up, you are placing your real estate professional in the role of a tour guide, not someone who can help you find a home within your budget. You'll wind up wasting your time and that of the seller.

Once you have signed a contract to purchase a home, you must choose a lending institution or mortgage company from which to obtain a home loan. A loan application will request financial data including place of employment, assets and liabilities (including recurring debts such as credit card bills and car payments).

Here are two important tips on loan qualification;

1) Do not borrow the down payment without disclosing the loan, submit fake letters-of-credit or gift letters or make secret financial arrangements. The probability is it will come back to bite you at a later date, and you will reget it.

2) Accurately list your income and assets, all debts and the approximate amounts you owe.

Credit reporting agencies compile credit reports on consumers, including bill payment history, as well as whether a person has been sued or filed for bankruptcy among other information. If your ability to obtain a mortgage is adversely affected by the credit report, you have the right to challenge its accuracy and seek corrections. The credit report is part of the information the lender uses to determine if you qualify for a loan. It is not a mechanism to prevent you from buying.

Remember, lenders want to make loans, not turn them down.  It is always worth your while to try and negotiate a better interest rate with your lender, especially if you have a good credit rating.